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A new report by the AKTRIN Furniture
Information Center analyzes the economic and demographic forces
impacting the demand for household furniture in Canada. The study is
finely segregated by product categories and geographical regions. The
author of the book comes to some interesting and unexpected conclusions
which need to be taken into account to gain a thorough appreciation of
the present and future course of the Canadian furniture demand.
Forecasts are provided to 2015.
Over the last two decades Canadian
household furniture purchases increased from about $4,522 million in
1986 to $10,140 million in 2005, or more than two times Total annual
sales since 1998 exceeded the 1989 pre-recession peak by a widening
margin.
Sales increased at an average annual
pace of 4.8% between 1986 and 2005. The fastest pace was in the years
1986, and 2000 when growth exceeded 10% per year. The slowest pace was
during the early 1990s. From 1997 through 2005 sales were brisk with
annual gains in the 5.5% to 10% range each year.
Average prices of household
furniture went up by 34% between 1986 and 2005. The strongest
inflationary pressure occurred prior to 1992. On the other hand, prices
fell by a small margin in 1992 and – with the exception of 1999 – they
barely increased since that year. The path of price change for the
household furniture sector tends to mirror that for consumer prices
overall, but – on average – furniture price increases have been of a
lesser magnitude.
Over the period from 1986 to 2005
household furniture spending measured in constant 1997 dollars increased
from about $5,529 million in 1986 to $9,250 million in 2005 or 67%. Thus
much of the growth in spending in current dollar terms over this
period was due to the changes in prices.
Over the period from 1986 to 1989
real spending on household furniture grew at a pace averaging close to
5% per year, though the rate from year to year varied significantly.
Since 1997, the pace of real household furniture spending has been
strong, ranging from 5.4% to 8.4% per year. Furniture sales in constant
1997 dollar terms in 2005 were 49% higher than they had been in 1989,
the previous peak year for household furniture sales in Canada
AKTRIN expect the Canadian market
for household furniture will continue to grow in the future for several
reasons.
Canada’s total population will grow
by 6.9% between 2005 and 2015 propelled mainly by a net in-flow of
immigrants. Furthermore, the total number of households will grow by
12.3% over this period, or faster than the gain in population,
reflecting a continued gradual decline in the number of persons per
household due to the aging of the population. Thus, even if the amount
spent on furniture per household was to hold steady in real terms at the
$825 level of 2005 the furniture market would grow by 12.3%.
AKTRIN expect after tax income to
grow in real terms by close to 16% between 2005 and 2015 reflecting
three factors: output per worker growth exceeding 1% per year which
supports real average wage gains of a similar amount over that period, a
slightly rising ratio of employed persons per household reflecting the
aging of society into the higher labor-force-participation-rate
middle-age groups, and further slight declines in the personal tax load
at both the federal and the provincial level in Canada.
Together the above factors translate
into an increase of 28% in real terms in the total market for household
furniture in Canada between 2005 and 2015. In other words AKTRIN expect
furniture sales in constant 2005 dollars to reach a total of $ 12,979
million compared to $ 10,140 million in 2005.
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